The Cannabis Consumption Conundrum

The stroke of midnight on July 1, 2017, marked the moment that Nevada joined Alaska, Colorado, Oregon, Washington state and Washington, D.C., in legalizing the recreational consumption of cannabis. Many locals and a lot of tourists rejoiced, flooding dispensaries and shouting, “Take my money!” (I have no proof that was shouted, but it’s a fair assumption.)

And the dispensaries did: They took that money, roughly $3 million the first weekend. In about a week, the Nevada Tax Commission declared a state of emergency—several of the state’s licensed retail marijuana shops were running out of cannabis products.

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This declaration would be altered to a “statement” of emergency by the governor’s office, but the message remained the same: Nevada’s recreational marijuana industry could come to a screeching halt and even result in bankruptcies.

Unlike the other four states and the nation's capitol, liquor distributors were given the exclusive rights to transport marijuana in the state of Nevada for 18 months. However, many distributors failed to meet the state’s requirements for transporting cannabis and have yet to be licensed. As of July, Nevada had licensed 47 recreational marijuana dispensaries, and a number are operating on severely diminished inventories.

Keeping Consumption Private

But there’s a larger at issue at play here, one that affects all five legal recreational marijuana* states and the District of Columbia: Nobody has anywhere to consume cannabis publicly. A look at the nuts and bolts of recreational cannabis legislation makes it clear that it’s illegal for marijuana to be consumed within view or even smell of the general public. If you want to enjoy the cannabis products you’ve purchased legally, you’ll have to do it on private property, apparently away from the watchful eyes and prying nostrils of passersby.

Voters in Denver passed Initiative 300 in November of 2016, allowing for some businesses—including bars and cafes—to apply for “consumption area” permits issued by the city. As of the publishing of this article, however, no such areas have been opened.

Nevada Senator Tick Segerblom interprets current state laws as permitting local governments to issue licenses to legal consumption lounges or clubs and is seeking legal opinion on the matter. Everyone seems to believe that Las Vegas will become the Amsterdam of America, but that will never be the case without changes in legislation.

A 120-acre town was recently purchased by American Green, Inc., one of the biggest cannabis companies in the U.S. Nipton, California, was bought for around $5 million, and the company plans to invest another $2.5 million on improvements. The goal is to create a so-called “marijuana mecca,” one where public consumption will be legal. However, the creation of cannabis consumption areas doesn’t appear to be the primary motivation behind American Green’s purchase, and this is obviously a unique and unusual development.

Carving Out a Spot for Bars and Clubs

Pitkin County Sheriff Joe DiSalvo made his opinion clear on the matter of public cannabis consumption during the 2017 Nightclub & Bar Show panel “Monetizing Cannabis.” He disagreed with the concept of venues that serve both those who consume alcohol and those who consume cannabis. However, Sheriff DiSalvo, who operates in the county that oversees Aspen, Colorado, said at the show that it’s unfortunate there are no public venues inside which people can consume legal recreational marijuana.

Sheriff DiSalvo envisions cannabis clubs, but without legislation allowing such venues, cannabis consumption isn’t truly legal, is it? I’ll put it another way: Are those of legal age to consume cannabis really free to do so if they’re being sent behind private resident doors, out of view of the general public? Imagine if alcohol had been treated similarly on Repeal Day.

Most state and local laws in the United States prohibit the public consumption of alcohol (or even carrying of an open container of alcohol). But there are bars, nightclubs, restaurants and other areas beyond private residences where people can drink alcohol legally, and that has led to an industry that generates roughly $26 billion annually. According to GreenWave Advisors, an independent firm that provides research and analysis of the cannabis industry, legal cannabis sales reached $6.5 billion in 2016.

Billions of dollars in sales already, yet the bar, nightlife and restaurant business seems to have gotten ahead of itself. Or, more accurately, we seem to have gotten ahead of where lawmakers have been able—or willing—to go. Some American bar and restaurant owners who operate in legal recreational states saw dollar signs. Bar managers and bartenders got excited about cannabis cocktails. Customers figured they’d be able to enjoy a night out at a bar, nightclub or restaurant with their cannabis products of choice. Many brewers and distillers started biting their nails, imagining shrinking bottom lines from lost market share; so far, it’s perhaps only the beer and spirit producers that have seen a sliver of what they’ve imagined become reality.

This is significant for many reasons, not the least of which is the three additional states that will implement recreational marijuana laws next year. California (as of Jan. 1, 2018), Maine (as of Jan. 30, 2018) and Massachusetts (sometime between early to mid-2018) are poised to begin legal recreational marijuana sales. It has been predicted that Vermont, Connecticut and Rhode Island will be next to vote in favor of recreational cannabis legislation in 2018, and Texas and Arizona are states to watch as well.

State lawmakers need to tackle the complexities of legal recreational cannabis and providing permits for consumption venues. Responsible bar, nightclub and restaurant operators, seeking their share of the billions of dollars legal cannabis has been projected to generate, need audiences with their state and local politicians, lawmakers and law enforcement agencies. As more states vote to legalize recreational cannabis, the issue of public consumption needs to be figured out. Otherwise, the brewers and distillers who oppose such legislation will be right: market share will be lost, and bar and restaurant operators and those they employ may feel that impact too. The current administration, the current U.S. Attorney General, and the mixed messages from federal entities regarding federal marijuana laws and enforcement are making an already complicated issue even more difficult to navigate and predict. The only answer is to make your voice heard.

*Legal medical marijuana and legal recreational marijuana businesses face another massive problem: banking. Federal law prohibits banks and credit unions from accepting marijuana funds. Federal departments like the U.S. Treasury said as recently as 2016 that they wouldn’t attempt to prosecute or penalize financial institutions that promised to watch cannabis clients closely and report illegal activity, but the current administration’s Attorney General has indicated otherwise. Big banks are certainly not interested in taking a risk on cannabis businesses, and smaller institutions have likely been dissuaded by Sessions’ stance on marijuana as well.